The ultimate COVID thread

[Mman]

Buffett may start out buying cigarette butts for 10 cents on the dollar in the 60s, but his investment strategy has evolved over the years due to the influence of Ken Fisher and Munger.

He is more of a growth investor nowadays than anything.

he will tell you to not expect 15-25% returns long term. As for how he invests, he personally is still a value investor and not a growth investor. Charlie Munger just got him to stop buying decent companies for great prices and focus on buying great companies for decent prices.

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[Epilepsy365]

he will tell you to not expect 15-25% returns long term. As for how he invests, he personally is still a value investor and not a growth investor. Charlie Munger just got him to stop buying decent companies for great prices and focus on buying great companies for decent prices.

Guess what Buffet returns were in his first two decades of investment...

As for Buffet current investment strategies, I do see the occasional old school Benjamin Graham moves, but his investment aptitude has evolved over the years. He is mostly a growth investor now.

But his best attribute is recognizing talent and leveraging those talented people for above average profit. That was one of his key fundamental criteria in evaluating companies. Nowadays, due to him managing hundred of billions, he can no longer move in and out of stocks with speed and volume and thereby has mostly used this gift of identifying talented people aka buying out great companies at market prices to outperform the general market while managing hundred of billions.

 

[pgg]

The best thing about a 10 year bull market is everyone makes money.

The worst thing about a 10 year bull market are the Epilepsy365s who think they made money because they're smart.

 

[Mman]

Guess what Buffet returns were in his first two decades of investment...

I guess you missed the part where I pointed out that what Buffett was doing 60 years ago isn't possible today. He could buy companies that were selling for less than liquidation value and then just liquidate them.

 

[dchz]

I guess you missed the part where I pointed out that what Buffett was doing 60 years ago isn't possible today. He could buy companies that were selling for less than liquidation value and then just liquidate them.

That and his float from insurance companies pretty much gave him ridiculous amount of capital to do said liquidation.

 

[BLADEMDA]

 

[Epilepsy365]

The best thing about a 10 year bull market is everyone makes money.

The worst thing about a 10 year bull market are the Epilepsy365s who think they made money because they're smart.

Dissect my points if you want to be critical instead of the person.

Thanks.

 

[pgg]

Dissect my points if you want to be critical instead of the person.

Thanks.

Nah.

Your "It is not hard to make 15-25% per year if you know what you’re doing" quote stands on its own.

 

[Epilepsy365]

I guess you missed the part where I pointed out that what Buffett was doing 60 years ago isn't possible today. He could buy companies that were selling for less than liquidation value and then just liquidate them.

Warren Buffett Profile and Investing Strategy - GuruFocus.com

View information on Warren Buffett, Warren Buffett's fund, past performances, historical stock allocations and more.

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Still at least 15% average annual return in the 80s, 90s, and a sizable part of 2000s.

In fact, if Buffett is managing millions of dollars instead of hundreds of billions, it would still be an easy task for him to break annual return of > 15%.

 

[OTCAwesome]

Day trading the corona virus stocks such as APT, GILD, INO, NVAX, DGX, has actually been pretty fruitful, up about 40% in my brokerage accounts over the past 2 weeks. I like the IBD approach, there's ways to make money in a down market, especially when the correction is spearheaded by something like people freaking out about covid-19.

 

[BLADEMDA]

"Personally, I had no interest in any of these companies prior to their recent jump, and I see no reason to be bullish on them today. That's why my plan remains to focus my time and capital on companies that are poised to grow rapidly even if it takes a long time for governments to get the coronavirus under control."

Why Lakeland Industries, Alpha Pro Tech, and Vir Biotechnology Briefly Skyrocketed and Crashed Today | The Motley Fool

Traders are having a field day with stocks that are linked in any way to the coronavirus.

www.fool.com

 

[dchz]

It is not hard to make 15-25% per year if you know what you’re doing. Buy on cheap and hold those names for 5-10 years.

Ok if you know what you're doing, please tell me how you can tell a stock is cheap and gonna earn you 15-25% for 5-10 years.

Thanks.

 

[Mman]

Warren Buffett Profile and Investing Strategy - GuruFocus.com

View information on Warren Buffett, Warren Buffett's fund, past performances, historical stock allocations and more.

www.gurufocus.com

Still at least 15% average annual return in the 80s, 90s, and a sizable part of 2000s.

In fact, if Buffett is managing millions of dollars instead of hundreds of billions, it would still be an easy task for him to break annual return of > 15%.

I'm not even sure what you are getting at. You said it was easy to pick stocks that would return 15-25% per year no matter the market conditions and then post a link showing Berkshire's book value which has very little to do with his equity positions and mostly due to operating revenue from wholly owned companies.

And while Warren himself could probably pull an annual return in equities indefinitely of >15% if managing small amounts, that probably would put him in the 99.8th percentile of those attempting it and neither you nor I are likely to be able to do so going forward. Especially in a market that projects for something like 4-6% total return over the next decade.

 

[Epilepsy365]

Ok if you know what you're doing, please tell me how you can tell a stock is cheap and gonna earn you 15-25% for 5-10 years.

Thanks.

Valuations are relative based on federal reserve policy and federal rate. But, when it comes to strictly balance sheet analysis based on today environment (QEs forever) and on growth stocks that pass my other criteria, any stock with market cap traded - equity ~ 2 x (cumulative last 4 Qs revenue or projected annual revenue 12 months from now) is very cheap.

Assuming that the company shortcoming is short term and annual revenue will resume growing at the rate of min 10-15%, the company will be traded at 3-4 x (projected growth annual revenue) down the road. You're looking at a 4x to 5x bagger if you're holding it for min 5 years. Among my watchlist from my research, I will be or am building a position in the following names:

1) LYFT($30-35 range) for that autonomous driving movement 10 years from now
2) IRBT ($40-47 range) for that smart home movement with essential basic tasks being replaced 10 years from now
3) BIDU ($90-110 range) for the whole AI movement in China 10 years from now

 

[Epilepsy365]

I'm not even sure what you are getting at. You said it was easy to pick stocks that would return 15-25% per year no matter the market conditions and then post a link showing Berkshire's book value which has very little to do with his equity positions and mostly due to operating revenue from wholly owned companies.

And while Warren himself could probably pull an annual return in equities indefinitely of >15% if managing small amounts, that probably would put him in the 99.8th percentile of those attempting it and neither you nor I are likely to be able to do so going forward. Especially in a market that projects for something like 4-6% total return over the next decade.

Can I borrow your crystal ball for a moment?

 

[dchz]

The best thing about a 10 year bull market is everyone makes money.

The worst thing about a 10 year bull market are the Epilepsy365s who think they made money because they're smart.

 

[Mman]

Can I borrow your crystal ball for a moment?

it still works pretty good. A couple months ago it was priced for 2.52% returns over the next decade but has creeped up a bit.

If you think pulling those returns is so easy, maybe you should just list a few stocks that will return >15% annual for the next 15 years. This forum will save the post and we can all follow along.

 

[Epilepsy365]

it still works pretty good. A couple months ago it was priced for 2.52% returns over the next decade but has creeped up a bit.

If you think pulling those returns is so easy, maybe you should just list a few stocks that will return >15% annual for the next 15 years. This forum will save the post and we can all follow along.

I just did. Enjoy.

 

[Mman]

I just did. Enjoy.

for the sake of price transparency...

Lyft: $36.02
IRBT: $46.77
BIDU: $113.74

 

[Epilepsy365]

for the sake of price transparency...

Lyft: $36.02
IRBT: $46.77
BIDU: $113.74

Yup. I plan to buy those three stocks in volume once I liquidate my gold/silver positions in the coming weeks/months. I had established my gold/silver positions in Dec 2018-Jan 2019 when the yield curve inverted then.

 

[deleted126335]

Yup. I plan to buy those three stocks in volume once I liquidate my gold/silver positions in the coming weeks/months. I had established my gold/silver positions in Dec 2018-Jan 2019 when the yield curve inverted then.

They are likely to be somewhat cheaper tomorrow. Dow futures down about 1,000 currently.

 

[Deanmonster]

Yup. I plan to buy those three stocks in volume once I liquidate my gold/silver positions in the coming weeks/months. I had established my gold/silver positions in Dec 2018-Jan 2019 when the yield curve inverted then.

Man, u should use some of that cheap leverage out there right now... u are gonna be rolling in it...

 

[Epilepsy365]

Man, u should use some of that cheap leverage out there right now... u are gonna be rolling in it...

I am an investor not a gambler. One of my rules is to not touch leverage bc I’m horrible at timing the market.

 

[okayplayer]

I am an investor not a gambler. One of my rules is to not touch leverage bc I’m horrible at timing the market.

?!?!?

 

[pgg]

I’m horrible at timing the market.

 

[deleted59964]

Dow Industrials Close 1,000 Points Lower as Coronavirus Cases Mount

Investors around the world stepped up their retreat from stocks and piled into haven assets like government bonds and gold, reflecting escalating worries that the coronavirus will crimp global growth.

www.wsj.com

all holding your nerve?
i’m still

 

[deleted126335]

all holding your nerve?
i’m still

 

[Mman]

View attachment 297965

if we drop 30-50% from here I will awaken from my slumber and start pouring money hand over fist into the market

 

[dchz]

The real smart move is to have all your investment sitting in cash and then buy in when the market bottoms out in about a year or 2.

I've been doing this since 2017.

You’re right. Just hold the cash for the next 30 years.

Man timing the market is hard. What incredible discipline did it take for me to hold my whole account in cash since 2017.

The market is almost at about the same place as nov 2017. But i'm still waiting. Prob buy in when S&P 500 is around 2300?

What do you think @periopdoc?

 

[Mman]

Man timing the market is hard. What incredible discipline did it take for me to hold my whole account in cash since 2017.

The market is almost at about the same place as nov 2017. But i'm still waiting. Prob buy in when S&P 500 is around 2300?

What do you think @periopdoc?

from Nov 2017 through Mar 2020 (until massive down today) the S&P total return was a shade over 23%.

 

[OTCAwesome]

"Personally, I had no interest in any of these companies prior to their recent jump, and I see no reason to be bullish on them today. That's why my plan remains to focus my time and capital on companies that are poised to grow rapidly even if it takes a long time for governments to get the coronavirus under control."

Why Lakeland Industries, Alpha Pro Tech, and Vir Biotechnology Briefly Skyrocketed and Crashed Today | The Motley Fool

Traders are having a field day with stocks that are linked in any way to the coronavirus.

www.fool.com

I fully agree with you. All of my trades have essentially been swing trades, always liquidating by market close

 

[dchz]

from Nov 2017 through Mar 2020 (until massive down today) the S&P total return was a shade over 23%.

I know right?! It's such a long con!

 

[periopdoc]

To whomever it was that was giving me **** earlier, I don't day trade.
¯\_(ツ)_/¯

I did short airlines last week, when I noticed the price of flights to Seattle drop from $800 round trip to under $200. I sold 50% of my AAPL. I'm on the sidelines now.

I do believe, and I have made the claim here before, that the people who truly control the market will crash it into the election. They want to kill the Trump economy to be sure he isn't re-elected, and they were just waiting for a trigger.

China also needed something to blame so they could let their market drop to where it should be.

The quant/algo guys that I know have had this scenario programmed in since the 2016 election.

 

[dchz]

The quant/algo guys that I know have had this scenario programmed in since the 2016 election.

Would you PM me when these quant/algo guys buy back in?
also what do they buy back into? admiral 500 index funds?

 

[sevoflurane]

I can’t remember a drop this large since 2008. Glad to have a significant position in bonds and CD’s. I hope it drops even further.

 

[Epilepsy365]

This drop is nothing in comparison to the Wild West time bet 2008-2009.

All the banks and hedge funds are holding back the sell orders this morning right now. The selling will intensify after lunch.

A 5% drop is nothing. With crude down by 30% overnight, the general market should be down by 10% now. But that will cause too much panic.

 

[sevoflurane]

I said since 2008.
And I certainty would not not call it nothing.

 

[nimbus]

I feel like covid is mother nature’s way of telling us to slow down, stop running around like crazy headless chickens, and stop our hyperconsumption. I kinda hope the slowdown is permanent.

 

[dchz]

I feel like covid is mother nature’s way of telling us to slow down, stop running around like crazy headless chickens, and stop our hyperconsumption. I kinda hope the slowdown is permanent.

WTF?

No dude, some chinese guy didn't contain the virus they created in a lab....

the market was due for a correction anyways, just hilarious the catalyst is some virus from china.

 

[Mman]

A 5% drop is nothing. With crude down by 30% overnight, the general market should be down by 10% now. But that will cause too much panic.

Just curious why the price of a barrel of oil dropping would make you think the discounted future cash flows of every company in the country should be worth 10% less today than they were on Friday.

 

[Epilepsy365]

Just curious why the price of a barrel of oil dropping would make you think the discounted future cash flows of every company in the country should be worth 10% less today than they were on Friday.

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10% of junk bonds are from the energy sector.

10% of well paying US jobs are energy.

Start thinking about the effects on the US economy with 50% of energy jobs in the US cut, and stress of junk bond default on private equity, venture capital, and current market valuation of companies that used projected growth of 10-15%.

 

[Mman]

Become an FT subscriber to read | Financial Times

News, analysis and comment from the Financial Times, the worldʼs leading global business publication

www.google.com

10% of junk bonds are from the energy sector.

10% of well paying US jobs are energy.

Start thinking about the effects on the US economy with 50% of energy jobs in the US cut, and stress of junk bond default on private equity, venture capital, and current market valuation of companies that used projected growth of 10-15%.

things like World Wars have not had that sort of impact on US real GDP so please forgive me for not shaking in fear. People should buy and sell equities based on decades long time horizons, not because of what they think earnings will look like in the next quarter.

 

[deleted171991]

Just curious why the price of a barrel of oil dropping would make you think the discounted future cash flows of every company in the country should be worth 10% less today than they were on Friday.

Of course the DCFs will be worth less in a recession, for the simple reason that sales and earnings will be lower. Unprepared companies could even go bankrupt.

The drop in oil prices may herald the beginning of a bad recession (i.e. decrease in demand). Yes, there is a big component of mass psychosis (which also happens in old bull markets, aka bubbles, like the one we were just having), but that does not change the fact that the world economy may go into a recession (and so will many of our multinationals in the S&P 500). All it takes is a severe pandemic, something that looks more like World War Z and less like today.

Anybody who's trying to predict the market is a fool. It's hard even in the best of times, but nowadays we have no idea how bad this virus will actually be. Only time will tell. Fact is we have a dumb president surrounded by even bigger sycophantic fools, unlike the luminaries who got us out of trouble in 2001 and 2008, who were seasoned financiers with a lot of macro experience. And we are more dependent on other economies (e.g. China) than ever. Pessimism is wise.

Still, most individual investors should just sit on their hands and watch (or DCA). The long-term outlook is historically rosy. History does not repeat itself, but it tends to rhyme.

 

[okayplayer]

I must have missed all the posts where this forum’s esteemed day traders/market prognosticators predicted this a month or 2 ago?

 

[deleted126335]

if we drop 30-50% from here I will awaken from my slumber and start pouring money hand over fist into the market

 

[doctalaughs]

If you truly can predict the market and make 15-25% long term then you definitely should not be in medicine. Plenty of ibanks or large funds that would be glad to pay you north of 100 mill/ yr if you can prove it.

 

[Mman]

Of course the DCFs will be worth less in a recession, for the simple reason that sales and earnings will be lower.

If you are looking out over the next 100 years, your long term view of companies should not change with a recession. I mean we will continue to have them. It's a part of the normal business cycle and that is priced into every stock.

Ben Graham's analogy that in the short term the stock market is a voting machine and in the long term it is a weighing machine needs to be taken to heart on days like this. A random S&P500 company did not become 5 or 10% less valuable today than it was on Friday, but that's what the market price is claiming. Intrinsic value can be difficult to know exactly, but it's not hard to see that market value can drastically swing away from it for periods of time.

 

[deleted171991]

In 100 years, we'll be dead, and so will most companies. But I get your gist (and I don't disagree). Still nobody cares about the DCFs beyond 5-10 years, because they are impossible to predict for most businesses.

Let's just hope that Mr. Market is finally beginning to turn into a weighing machine.

 

[Epilepsy365]

If you are looking out over the next 100 years, your long term view of companies should not change with a recession. I mean we will continue to have them. It's a part of the normal business cycle and that is priced into every stock.

Ben Graham's analogy that in the short term the stock market is a voting machine and in the long term it is a weighing machine needs to be taken to heart on days like this. A random S&P500 company did not become 5 or 10% less valuable today than it was on Friday, but that's what the market price is claiming. Intrinsic value can be difficult to know exactly, but it's not hard to see that market value can drastically swing away from it for periods of time.

I actually agree with all of your points here.

But DCFs are completely worthless especially when there are some many variables the farther you go into the future.

It is also this tenet that I refuse to be suckered into day trading bc the shorter your investment horizon, the more amplified the daily noises. There is a nice soft spot in between, and for me that’s a 5-10 years horizon.

 

[deleted171991]

View attachment 297981View attachment 297981

He'll probably DCA or value average. I plan to do the same.

If one waits till the recession is clearly over (if it happens), one may miss some serious upside. Historically. The market goes up AND down discretely (like today), not continuously, hence one has to be in the market or one may lose some of the best days. It's hard/impossible to predict the bottom.